LLOY has pre-announced FY 13 results this morning. “Underlying” PBT of £6.2bn compares with our £6.4bn estimate and the consensus of £5.8bn. The beat relative to consensus is likely a mix of income growth (core loans grew 3% in FY 13) and better than expected impairments. As a result of a further £1.8bn of PPI provisions (FY ’13 total of £3.05bn) and £130m for interest rate hedging charges, the group now expects a “small” statutory profit before tax vs the £2.7bn est. Based on this, we would expect a small statutory loss after tax.

Dividend timing and size disappoint. The Lloyds Banking Group PLC (ADR) (NYSE:LYG) (LON:LLOY) has announced that it intends to apply to the PRA in H2 14 to restart dividend payments at a “modest level” and expects progressive policy moving to a payout ratio of at least 50% over time. The timing of dividend payouts is consistent with our long-held views regarding repatriation of capital for LLOY. The “modest level” is disappointing to us as we had factored in a 40% pay-out in 2015, which looks optimistic in light of today’s announcement. We would not expect a >50% pay-out until 2018 at best.